Social Movement Theory and the Evolution of New Organizational Forms* Anand Swaminathan ...

51 Pages·2001·0.13 MB·English

Social Movement Theory and the Evolution of New Organizational Forms*

Anand Swaminathan
Graduate School of Management
University of California at Davis
One Shields Avenue
Davis, CA 95616-8609
Phone: [phone]
e-mail: [email protected]

James B. Wade
University of Wisconsin School of Business
4192 Grainger Hall
975 University Avenue
Madison, WI 53706
Phone: [phone]
e-mail: [email protected]
February 2000

* Prepared for inclusion in C.B. Schoonhoven and E. Romanelli (eds.), The Entrepreneurship
Dynamic in Industry Evolution, Stanford University Press, Forthcoming. We appreciate
comments from Kim Elsbach, Elaine Romanelli, and Kaye Schoonhoven on earlier drafts of this
manuscript. We also want to thank Violina Rindova for providing us with data on the specialty
coffee industry.
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Abstract

New organizational forms face formidable obstacles in that new roles have to be learned,
external ties to supporters are often lacking, and they often must rely on social relations among
strangers. As a result, new organizations suffer from a liability of newness and often fail. But,
some new organizational forms survive and grow. Often these organizations overcome
substantial obstacles through collective strategies that bear an uncanny resemblance to tactics
and strategies adopted by organizations that spearhead social movements. In this chapter, we
first note that both social movements and new organizational forms need to mobilize resources to
survive and grow. We then focus on four aspects of social movements that are also likely to
influence the evolution of new organizational forms: (a) the preexisting infrastructure that
promotes or retards the mobilization of resources, (b) the generation of collective action frames,
(c) the evolution of collective action over time, and (d) the influence of collective action on the
choice of organizational form.
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Introduction
New organizational forms face formidable obstacles in that new roles have to be learned,
external ties to supporters are often lacking, and they often must rely on social relations among
strangers (Stinchcombe, 1965). As a result, new organizations suffer from a liability of newness
and often fail (Freeman, Carroll and Hannan, 1983). But, some new organizational forms
survive and grow. In part, this occurs because some new organizational populations have
superior technology or simply contain organizations that fit the existing environmental
contingencies. Often, however, these organizations overcome substantial obstacles through
collective strategies that bear an uncanny resemblance to tactics and strategies adopted by
organizations that spearhead social movements (Hannan and Carroll, 1992: 202-204; Carroll,
1997: 129-130). With a few notable exceptions (Aldrich and Fiol, 1994; Hunt and Aldrich,
1998), the entrepreneurship literature has not emphasized how strategies of collective action can
promote entrepreneurial success.
Like social movements, a key task for participants in emerging industries is to gain
cognitive and sociopolitical legitimacy (Delacroix and Rao, 1994; Aldrich and Fiol, 1994). In
attempting to achieve this legitimacy, interactions between firms often take on a social
movement like character. Cooperation rather than competition is the norm as founders attempt
to mobilize resources through collective action such as the formation of trade associations and
mutual benefit societies. In this chapter, we first note that both social movements and new
organizational forms need to mobilize resources to survive and grow. We then focus on four
aspects of social movements that are also likely to influence the evolution of new organizational
forms: (a) the preexisting infrastructure that promotes or retards the mobilization of resources,
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(b) the generation of collective action frames, (c) the evolution of collective action over time,
and (d) the influence of collective action on the choice of organizational form.
Our objective in this chapter to develop a diverse set of theoretical propositions that we
hope will highlight the utility of applying ideas and findings from social movement theory and
research to the study of the evolution of new organizational forms. Therefore we do not attempt
to develop an overarching theoretical model of how social movement theory applies to
entrepreneurship. Throughout the chapter we use examples from the emergent phase of a variety
of industries to support our propositions. In particular, we draw upon descriptive data that we
have gathered on craft breweries, boutique wineries and specialty coffee shops.
Resource Mobilization and Entrepreneurship
Resource mobilization theory, the dominant perspective on social movements, argues that
social movements grow and decline as resource levels fluctuate (Jenkins and Perrow, 1977;
McCarthy and Zald, 1973, 1977). Four general types of resources need to be accumulated for
collective action to occur. These are subsumed under the broad categories of people (both
leadership and cadre), expertise or prior experience, financial and information resources, and
legitimacy (Cress and Snow, 1996: 1090).
Builders of new organizations must acquire a similar set of resources if they are to
succeed. First, the characteristics and human capital of the founders often influences the survival
prospects of new organizations (Brüderl, Preisendörfer, and Ziegler, 1992). Results concerning
the influence of human capital on firm performance in the entrepreneurship literature are mixed.
One study showed, for instance, that companies founded by individuals had entrepreneurial
parents had higher sales (Duchesneau and Gartner, 1988). In contrast, Cooper, Dunkelberg, and
Woo (1988) found no relationship between family background and the survival of new ventures.
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The impact of age, education and experience of founders on the founding and
performance of new firms has also been investigated. Experience in founding prior startups has
been shown to have both positive (Doutriax and Simyar, 1987) and negative (Dunkelberg,
Cooper, Woo, and Dennis, 1987) effects on firm performance. Eisenhardt and Schoonhoven
(1990) found no relationship between founding team experience and new firm growth. While
education seems to be an important predictor of success in some instances, it appears to have a
negative effect in high technology industries (Cooper and Gimeno Gasc(cid:1)n, 1992).
Entrepreneurs who start businesses with greater initial capital have an increased chance
of success (Cooper and Gimeno Gasc(cid:1)n, 1992: 314). Informal sources of capital, most often
family, friends and business associates, provide smaller amounts of funds at an earlier stage in a
new venture with formal venture capital funds playing a larger role in late-stage financing (Frear
and Wetzel, 1989, 1990, 1992). Entrepreneurs also network with others in order to gain access
to sources of information, capital and expertise (Cooper and Gimeno Gasc(cid:1)n, 1992). The use of
professionals to develop business plans and the use of accountants, for instance is positively
correlated with performance (Duchesneau and Gartner, 1988). Aldrich, Rosen, and Woodward
(1987) showed that initial profitability was correlated with network density and the average
strength of ties while network size was related to later profitability. Similarly, Dollinger (1985)
found that the extent to which entrepreneurs devoted time to noncustomer contacts, suppliers,
and trade associations was positively related to performance.
While entrepreneurship research typically focuses on resources that facilitate the
founding, growth and survival of individual organizations, we use resource mobilization theory
to draw attention to the collective mobilization of resources by organizations that belong to a
particular form. Resource mobilization theorists call attention to the structures and incentives
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that make collective action more or less costly (Oberschall, 1973; McCarthy and Zald, 1977).
New social movements must adopt strategies that link them to supporters and other resources if
they are to be successful. Often, they must also overcome determined opposition by
countermovements.
Builders of new organizational forms face similar constraints. New organizations must
acquire capital as well as individuals with the requisite skills and capabilities. Moreover, both
social movements and new organizational forms must attain at least some degree of external
legitimacy if they are to mobilize resources and attain their goals. Because of these similarities
we contend that strategies and tactics used by social movements to acquire resources and sustain
collective action will be also applicable to new organizational populations in the business sector.
We highlight two important parallels between the evolution of social movements and new
organizational forms. First, their emergence is facilitated by changes in the broader
sociopolitical and economic environment. Second, the pre-existing infrastructure or
organizational field in which they are embedded influences both the strategy and performance of
social movements and new organizational forms.
Environmental Change and Opportunity Structure
Changes in the institutional structure and the ideology of powerful actors such as
organized political parties and the state create opportunities for insurgents to organize social
movements (Jenkins and Perrow, 1977; Tilly, 1978; McAdam, 1982; Tarrow, 1983). McAdam
(1982), for example, attributes the diffusion of black protest activity in the 1960s to several
trends that strengthened civil rights forces. These trends included the expansion of the black
vote, and the shift of blacks to the Democratic Party. Changes in the political power structure of
a state can also open up opportunities for movements to form (Kriesi, 1995). For instance,
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Amenta and Zylan, (1991) show that the Townsend movement which sought Federal pensions
for the elderly in the Great Depression was much larger in states that had passed pension laws
and in states that had greater executive capacities in terms of public spending. Political
opportunity for movement organizers increases when (a) the institutionalized political system
becomes more open, (b) elite alignments become unstable, (c) it is possible to form alliances
with elite groups, and (d) the state's capacity and propensity to repress protest falls (McAdam,
1996: 27). Changes in the political opportunity structure have been used to explain the timing of
emergence and outcomes for many types of social movements. Among others, these include the
Italian protest cycle (Tarrow, 1989), the American women's movement (Costain, 1992), and the
nuclear freeze movement (Meyer, 1993).
Just as favorable opportunity structures give rise to social movements, changes in the
environmental opportunity structure create niches for new organizational forms. In some cases
changes on the demand side can give rise to new organizational forms. For instance, greater
affluence, changes in lifestyle, and consumer demand for greater variety have lead to the
emergence of new organizational forms in the U.S. wine and brewing industries (Delacroix and
Solt, 1988; Swaminathan, 1995, 1998) and in the coffee industry (Rindova and Fombrun, 1999).
Technological and institutional discontinuities also open up new niches. For example, foundings
in the semiconductor manufacturing industry seem to be driven by technological innovation
(Brittain and Freeman, 1980). Abernathy and Clark (1985: 18) suggested that three specific kinds
of environmental changes might lead to the formation of a new niche. First, new technological
options offer improved performance or new applications that cannot be met by current product
designs. Tushman and Anderson (1986) accounted for product substitution through technological
changes that destroy the competencies of incumbent firms. The emergence of new product
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classes such as cement (in 1872), airlines (in 1924), and plain-paper copying (in 1959) is
attributed to basic technological innovations. Second, changes in government policy, especially
in regulatory regimes may favor revolutionary strategic development. Deregulation allowed
point-to-point air service providers and non-traditional telecommunication service providers to
emerge. Third, changes in consumer preferences may impose requirements that can be met only
through new designs. More recently, the rapid growth and use of the Internet opened up
opportunities in electronic commerce for retail organizations, banks and stock brokerages (Hunt
and Aldrich, 1998). Such a development is consistent with Romanelli’s (1989) view that any
event or process that alters patterns of resource flows can create resource spaces for new
organizational forms.
Proposition 1: Changes in the environmental opportunity structure create niches that
allow for the emergence of new organizational forms.
Preexisting Infrastructure and the Evolution of New Organizational forms
In this section, we highlight how the pre-existing infrastructure or organizational field in
which new organizational forms are embedded affects the emergence of collective action, and, in
turn, influences both the strategy and performance of new organizational forms.
Preexisting Infrastructure and Positive Externalities
As Olson (1965) has noted, generating collective action is quite difficult. Once
environmental opportunities arise, however, preexisting infrastructure reduces the cost of
organizing by facilitating the acquisition of resources through collective action. Preexisting
networks can aid in an industry’s development by providing linkages to customers as well as
sources of human capital. Because preexisting networks are a conduit of information regarding
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the industry and the individuals in it, they can also promote trust, a key factor in legitimating an
industry (Aldrich and Fiol, 1994).
For instance, the pro-life movement’s initial dependence on the infrastructure of the
Catholic Church and later on that of fundamentalist Protestant churches was crucial to its growth
(McCarthy, 1987). Similarly, existing black institutions such as churches and schools served as
an infrastructure through which information and resources could be directed to the civil rights
movement in the 1960s. Minkoff (1997) shows that increases in the organizational density of
African-American civil rights organizations promoted both protest activities by feminists and the
formation of women's organizations (see also Clemens, 1993). Meyer and Whittier (1994) argue
that the feminist movement influenced the evolution of the peace movement. Amenta and Zylan
(1991) show that the Townsend movement to secure federal pensions for the aged was stronger
in states which had other strong indigenous organizations such as the Church of Christ, Scientist,
and the Woman's Christian Temperance Union. Ingram and Simons (1998) find that the failure
rate of Israeli worker cooperatives decreases with increases in the density of credit cooperatives
and kibbutzim, organizations that possess a similar ideology.
Preexisting networks provide a source of individuals who can potentially become
decision makers in the movement (the cadre) as well as those who become full time members of
the organization (the professional cadre) (Zald and McCarthy, 1987). Preexisting networks serve
similar purposes in new industries. For example, in the early semiconductor industry, Bell Labs
was a major source of both founders and expert personnel for new firms in the industry (Braun
and Macdonald, 1982). Besides providing a source of recruitment into the industry, the informal
and formal networks at Bell Labs were a source of information that could be used to identify
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potential employees with the requisite skills. Similarly, pharmaceutical firms serve as a source of
talent for biotech firms and Internet firms often recruit executives from established firms.
If potential customers are also linked into networks, it can allow new industry members a
conduit through which to generate publicity about the industry and recruit customers. For
example, early personal computer firms could draw upon numerous hobbyists who were
organized into user groups. These groups not only served as potential customers, but also as an
organized network through which information could be channeled to the public regarding the
industry.
Preexisting infrastructure can be utilized by a social movement for purposes other than
that for which it was originally designed and thus represents a positive externality for the social
movement. If those favoring change are linked together though preexisting relations, the
prospects for mobilization are enhanced. Moreover, embeddedness in a preexisting network of
relationships helps in acquiring resources and in communicating information among movement
participants (Walker, 1983). Thus, the fact that many entrepreneurs that later started brewpubs
and microbreweries were involved in home brewing clubs and associations is likely to have
created an infrastructure that facilitated the emergence of collective action in these industries.
Indeed, Wade et al. (1999) speculate that collective action will emerge more quickly in industries
in which entrepreneurs have overlapping social and professional networks. The prior experiences
of entrepreneurs in the craft brewing industry are likely to have promoted common
understandings among industry participants. These prior relationships may be part of the reason
why microbreweries have an active industry association and often cooperate by entering into
joint purchasing and distribution agreements. An interesting avenue for future research would be
to examine similarities in demographics and experience among entrepreneurs in new industries